Tag: RAJAR

Digital radio stations: listeners abandon ship

The latest RAJAR radio audience data demonstrated one thing clearly: the UK radio industry’s strategy for its digital stations is in tatters. Audiences for digital radio fell off a cliff during the last quarter of 2009. This did not appear to be the result of any specific strategy shift (no station closures, only one minor format change) but more the result of increasing public malaise about the whole DAB platform and the radio content that is presently being offered on it (plus a little Q4 seasonality) . The figures speak for themselves.

Total listening to digital radio stations is back down to the level it achieved in 2007, following a period of sustained growth between 2000 and 2007. Far from moving towards some kind of exponential growth spurt as the industry had expected, total listening now seems to have plateau-ed. It appears that market saturation has already been reached for much of the content presently available on digital radio platforms, considerably earlier than had been anticipated, and at a level of listening that cannot justify these stations’ existences for their commercial or BBC owners.

In the commercial sector, only Planet Rock has maintained its momentum, probably a reflection of its commitment to offering its listeners genuinely unique content. Elsewhere, the jukebox music stations have suffered massive falls in listening, possibly a result of their ease of substitution by online offerings such as Spotify and Last.fm, and of owner Bauer’s policy to curb investment in digital radio broadcast platforms and content.

Commercial radio has talked the digital talk for years about striving to make DAB a successful platform, vaguely promising new digital radio ‘content’ that it has still not delivered. Instead, it has spent the last few years cutting costs, consolidating, lobbying the government, complaining about the BBC, closing its digital stations and contracting out its DAB capacity to marginalised broadcasters (religious, ethnic, government-funded and listener-supported stations) that will never attract mainstream audiences to the platform (and whose listening is not even measured in the RAJAR audience survey).

From the listener’s perspective, the only thing that has happened to the DAB platform in recent years is the disappearance of commercial digital stations such as OneWord, TheJazz, Core, Capital Life and Virgin Radio Groove. For the average consumer, the arrival of Traffic Radio, Premier Christian Radio or British Forces Broadcasting Service are hardly replacements.

A report commissioned by RadioCentre from Ingenious Consulting in January 2009 concluded:

“Commercial radio is now at a crossroads with respect to DAB. It needs either to accept that the commercial challenges of DAB are insuperable and retreat from it – such a retreat, because of contractual and regulatory commitments, would be slow and painful; or strongly drive to digital.”

In the year since this report was prepared, commercial radio has done neither. Instead, it has spent a small fortune on parliamentary lobbying, not one iota of which has had a direct impact on 10 million increasingly baffled DAB radio receiver owners. These latest RAJAR data convey their clear message that content is their only concern.

For the BBC, the problem is somewhat similar. With the exception of Radio 7, listening to its digital radio stations remains unimpressive, despite them benefiting from massive BBC cross-promotion over many years. Some stations are outright disasters – Asian Network is listened to less now than it was almost seven years ago, when only 158,000 DAB radios had been sold. Some stations are simply not suited to the DAB platform – 1Xtra targets a youth audience who listen to a lot of radio online and via digital TV, but who have little interest in DAB (particularly as DAB is not available in mobile phones). Some stations will become redundant in an increasingly on-demand world – Radio 7 would eventually be little more than a shopfront for the huge pick’n’mix BBC radio archive to be made available to consumers online.

For the BBC, it is becoming increasingly hard to justify spending, for example, £12.1m per annum on the Asian Network when its peak audience nationally is only 31,000 adults. Broadcast platforms such as FM attract huge audiences for a fixed cost, making them the most efficient distribution system for mass market live content. As a result, Radio 1 costs us only 0.6p per listener hour. By comparison, the Asian Network is costing 6.9p per listener hour, probably making it more expensive to ‘broadcast’ than to send each listener a weekly e-mail attaching the five hours of Asian Network shows they enjoy.

The BBC should still be congratulated for creating new digital radio services in 2002 that attempted to fill very specific gaps in the market which commercial radio was unlikely to ever find commercially attractive. This is precisely why we value a public broadcaster in the UK. However, the BBC digital radio strategy over the last decade has suffered from:
•   The BBC’s evident inability to successfully execute the launch of genuinely creative, innovative radio channels that connect with listeners (GLR, the ‘new’ Radio 1, the original Radio 5)
•   The BBC pre-occupation with constantly creating new ‘broadcast channels’ when most niche content is more suited to narrowcasting and delivery to its audience via IP (live, on-demand or downloaded).

For the UK radio industry, its digital ‘moment of truth’ has belatedly arrived. A new strategy now has to be adopted which does not continue to raise the DAB platform to the level of a ‘god’ that has to be worshipped above all others. The future of radio is inevitably multiple-platform and the industry’s focus has to be returned to producing content, rather than trying to control the platforms on which that content is carried.

I suspect that Tim Davie, director of BBC Audio & Music, will eventually lead these winds of change, following in the wake of director general Mark Thompson’s pronouncements at the end of this month as to where the internal financial axe will fall. Where the BBC leads, commercial radio will inevitably (have to) follow.

The future digital radio strategy is likely to be ‘horses for courses’. Rather than all radio content being delivered via all available platforms, it will in future be delivered only where, how and when it is most demanded by listeners. Our economic times make this mandatory. The DAB platform’s mass market failure will make it necessary.

Kiss FM: it's the same old songs

London dance music radio station Kiss FM has re-scheduled its specialist shows to slots after midnight, according to The Guardian, and has cut their duration from two hours to one hour. Almost nobody listens to radio on a weekday after midnight, RAJAR audience data show, so the policy change condemns these shows to a radio graveyard that is very close to extinction.

According to Kiss FM specialist DJ Logan Sama: “The shift of focus away from upfront specialist music to more playlisted hours is one which the management feel will enable the station to compete with the likes of Capital and Galaxy FM. All of the genre-specific late-night shows took the brunt of the hit.”

When Kiss FM was launched in 1990, its specialist music shows started at 7.30pm on weekdays, and the preceding half-hour magazine show ‘The Word’ created a watershed between the daytime mainstream playlist and the more radical evening shows. There was a specific commitment in the station’s licence to broadcast these shows so that Kiss FM would give airplay to music unheard anywhere else on the radio in London.

In the intervening years, through attrition, Kiss FM’s owner (EMAP then, Bauer now) has succeeded in ‘persuading’ the regulator to loosen these licence requirements for the station to broadcast specialist music shows. To its discredit, the regulator has seemed happy to go along with such proposals, permitting Kiss FM to be turned into a much more mainstream hit-orientated station than it was ever intended to be.

What the regulator and some radio owners seem to fail to grasp is that, in a crowded radio market such as London, one station can attract a significant (and loyal) audience by doing something deliberately different both from its competitors and from its own daytime mass-market output. This works both commercially and altruistically. In the case of Kiss FM, advertisers can reach a niche audience that daytime shows do not deliver (if I organise a reggae concert, the best place to advertise it is in a reggae radio show); citizens are offered a genuine extension to the ‘listener choice’ that the regulator loves to cite.

This is not just a theory – there is plenty of empirical evidence to demonstrate how it works. Look at Helen Mayhew’s evening ‘Dinner Jazz’ show on the original London Jazz FM, which was almost the only show on the station that delivered 100% jazz music, but also had higher ratings than any of the daytime playlisted output.

Kiss FM itself provides a good example of what can be achieved. In the graph above, the red line shows the current audience of Kiss FM London (RAJAR, Q3 2009) peaking at 147,000 adults at breakfast between 8 and 8.30am, then falling to a minimum of 1,000 adults by the early hours of the next morning. This is the normal pattern of listening for a mainstream music radio station in the UK.

The blue line shows the Kiss FM London audience a decade earlier in 1999 when specialist music shows still occupied the weekday evening hours. Note that, in the evening, during most of the hours from 7pm to midnight, the audience was bigger a decade ago than it is now. Has the subsequent replacement of specialist music shows with mainstream music in the evening improved Kiss FM’s audience at those times? Apparently not.

After the station launched in 1990, the daytime audience was lower than it is now, but the evening specialist music programmes generated huge audiences. Some of the Kiss FM evening shows attracted more listeners than any other London station in these evening timeslots, ranking them #1 in that daypart.

This was not an accident. Kiss FM’s original schedule was deliberately designed to attract significant audiences to each of a wide range of specialist music shows broadcast on weekday evenings. Listeners loved them – individual shows were promoted heavily on-air and in specialist music magazines. Advertisers loved them – the rates were cheaper than daytime and the spots regularly sold out.

Doing something different on-air can reap rewards, if you satisfy genuine listener demand and promote the hell out of it, so that people know the programmes are there. But, if you simply do the same in the evening that you are doing during daytime, your station is going to have much the same declining listening pattern as any other radio station.

If you compare Kiss FM’s current listening pattern to that of its competitors, you can see from the graph above that it delivers much the same weekday shape – a continuous decline from a peak at breakfast. The exception amongst the London commercial stations is Magic’s unusual peak between 10 and 11pm. Why? Because it schedules ‘The Mellow Ten At Ten’ each weekday evening from 10pm, a one-hour feature that breaks from its playlist.

Also noteworthy in the graph is the unusually high evening audiences achieved by Choice, with more listeners than the station attracts during the afternoon. Why? Because Choice schedules specialist music shows during weekday evenings (mixes, reggae, hip hop). Again, being different can pay off for both audiences and advertisers.

This concept – that individual radio stations often struggle to sound the same, even though ‘daring to be different’ pays dividends – has been understood since the earliest days of media theory. American economist Peter Steiner wrote:

“…. the existence of [different] program types and [different] audiences therefor is assumed by the broadcasting industry and forms the basis for [station] program decisions. In this case, it is the assumed size and distribution of listeners’ preferences that is decisive in determining the amount of [programme] duplication that will result. If, as is often suspected, broadcasters exaggerate the homogeneity of audiences and their preferences for certain program stereotypes, the tendencies towards [programme] duplication will be increased.”

Writing in 1951, Steiner already recognised that radio station owners will tend to duplicate each others’ formats and programme scheduling, rather than offering their audiences something different or unique. He wrote:

“The problem, of course, is that a series of competing firms, each striving to maximize its number of listeners, will fail to achieve either the industry or the social good. Here, then, competition is providing a less than desirable result.”

In the UK, our government created a broadcast regulator to intervene in the market to ensure that commercial radio station formats maximise the ‘social good’, as Steiner refers to it. The UK is in a very different situation from the US, where the regulator (FCC) does not interfere in the formats of radio stations. But the UK system will only work if the regulator understands the economic and social imperatives for market intervention and exercises those powers appropriately.

The increasing marginalisation over the years of Kiss FM’s specialist music programmes demonstrates that the regulator is oblivious to the economic and social imperatives to regulate. Instead, it is simply conspiring to deny both listeners and advertisers the programme diversity they should be entitled to. The fact is that ‘light touch’ radio regulation is not regulation at all, any more than driving a car with no hands on the steering wheel would be considered by a court to be ‘driving’.

A regulator that simply allows market forces, in Steiner’s words, to produce “a less than desirable result” is not regulating. The Independent was quick to blame Kiss FM’s owner:

“Once the king of pirate radio, the legendary station Kiss is being dragged into the mainstream by owners Bauer Media, which will today cut back a number of the Kiss specialist music shows and axe several presenters in order to reposition the network to take on Global Radio operations such as Galaxy. Shame.”

However, the blame should fall squarely on the regulator for allowing a station owner to pursue an objective that further restricts consumer and advertiser choice. There is no ‘free market’ for radio in London – the gap in the market created by Kiss FM’s marginalisation of specialist music genres and DJs will not be filled by another licensed radio station …… only by London pirate stations.

Pirate radio stations seem to be the only ones that implicitly understand Steiner’s competition theories perfectly, and they risk the consequences for putting them into action. Pirate radio’s popularity is no accident – it is a direct outcome of the failure of the regulator to regulate.

Internet radio: denigrate it, ignore it, marginalise it … consumers will still listen

It was a surprise to find that the entire front page of the most recent issue of the World DMB Forum’s global newsletter (‘Eureka!’) was filled with an article that did not extol the virtues of the DAB/DMB platform, but instead tackled the online radio platform and drew the conclusion that the internet “will NOT replace traditional broadcasting”. The article, entitled “The Future Of Radio”, sought to debunk the assertion that “the internet is the future of radio”.

It stated that the BBC iPlayer “allows the UK public to access almost all of its radio and TV programmes broadcast during the previous seven days”. This is inaccurate. The iPlayer offers nothing like “almost all” the BBC’s radio and TV output. Indeed, for some of the BBC’s radio and TV networks, the selection of content remains remarkably thin (mostly due to rights issues).

The article continued: “Given the outstanding success of the BBC’s iPlayer, it is surprising to learn from RAJAR’s latest audience figures that ‘radio via the Internet’ (in all its forms: live streaming; on-demand services and podcasting) accounts for only 2.2% of radio listening in the UK.”

This is untrue. The RAJAR 2.2% share figure ONLY includes simulcast live streams of the BBC and UK commercial broadcasters. It does not include on-demand services; it does not include podcasts; it does not include listening to online radio services such as Last.fm, Spotify and Rhapsody; and it does not include listening to audio from overseas broadcasters. There is a detailed section on the RAJAR web site that explains these facts. RAJAR has never claimed that its data for ‘internet’ listening includes anything other than simulcast live streams of BBC and UK commercial radio stations.

The article then drew the conclusion: “Taking these differences in penetration into account shows that DAB listening in the UK is 10 times more popular than listening via digital TV or via the internet.” However, it is unclear what the phrase “10 times more popular” is trying to imply. Is that ‘10 times more listening’? Or maybe ‘10 times more reach’?

Interestingly, exploring the latter metric, RAJAR’s own research (as part of its MIDAS survey, rather than the main diary survey) found in December 2008 that the weekly reach of all internet-delivered radio content in the UK was 14%, compared to the DAB platform’s weekly reach of 17.8% during the same quarter (see graph below). Ten times more popular? The platforms were almost neck-and-neck in the ‘reach’ metric. I wrote about this research a year ago. It is the closest we have for now to a like-for-like comparison that includes all forms of audio delivered by the internet.

  

The most recent reach data for the internet platform in the above graph derives from Q3 2008 because RAJAR has not publicly released comparative data derived from its two subsequent MIDAS surveys (which are now only available on subscription).

RAJAR was keen to stress in its press release accompanying this week’s latest MIDAS 5 survey that:

“74% of those Listen Again http://on-demand listeners said the service has no impact on the amount of live radio to which they listen, while half said they are now listening to radio programmes to which they did not listen previously”.

Somehow, the Daily Mail managed to mangle this factual statement into something that, yet again, portrayed the internet platform as an aggressor against DAB:

“Rajar says the figures do not mean people are abandoning traditional or DAB radio sets but that more Britons are trying and using online stations as well.”

  

The problem the radio industry faces with the RAJAR audience metric is that it cannot have its cake and eat it. Either it chooses:

• to restrict RAJAR to measuring ‘traditional’, live radio and accepts that, as a result, the data will inevitably show that listening to ‘traditional’ radio is in continuing decline (which is RAJAR today, see graph above); or

• to expand the RAJAR metric to measure ‘audio’ consumption that includes on-demand and podcast content, as well as non-traditional radio such as Spotify and Last.fm, thus demonstrating that total listening is not at all in decline but, on the contrary, has been enhanced by audio content increasingly consumed via non-broadcast platforms and ‘on the go’.

For the BBC, Director of Audio & Music Tim Davie hinted at the last RadioCentre conference that he would be interested to see RAJAR extended to encompass time-shifted and downloaded audio, both of which account for an increasing proportion of BBC radio listening.

For its part, commercial radio has shown no interest in advocating such a re-definition of the RAJAR metric. Not only do its offerings of time-shifted and downloadable audio remain miniscule compared to the BBC, but it is locked into a strategy to maintain its ‘walled garden’. Understandably, it has no desire to demonstrate to the world that it is losing listening to competitors’ time-shifted audio and online ‘radio’. UK commercial radio has enjoyed a nice little over-the-air duopoly from 1973 until recently – best just to pretend that it remains one of only two games in town.

The paradox here is that commercial radio is busy presenting advertising agencies and potential advertisers with RAJAR data that only tell part of the story of how and what audio people are listening to in 2009. However, once their meetings with commercial radio people are over, those same advertisers and agencies will inevitably be busy booking advertising with all sorts of online media, including Last.fm and Spotify. They know precisely what opportunities are out there in the wide world beyond traditional broadcasting.

Simply ignoring new businesses that are competing for your listeners’ attentions is not going to make them go away. Sticking your head in the sand can only have the effect of devaluing RAJAR as a useful and accurate metric in the long term.

Remember King Canute.

BBC radio: endangering commercial radio's 'heartland audience'

Dear David Liddiment

I was interested to see your article in The Guardian, on behalf of the BBC Trust, defending Radio Two from accusations made by the commercial radio sector that the station has deliberately sought a younger audience. You say:

“What about the challenge that Radio 2 is getting younger? We found that Radio 2’s under-35 audience did grow significantly between 1999/00 and 2004/5 (albeit from a low base). However, over the past five years, the age profile of the station has remained stable and there’s been no increase in reach to under-35s.”

Your analysis here focuses on two specific metrics – under 35’s and Radio 2’s ‘reach’ – whereas the important issues raised by commercial radio rightly concentrate on:
• Commercial radio’s ‘heartland audience’ of 15 to 44 year olds, which it has pursued for many years as a result of advertiser demand to reach this segment of the population;
• ‘Share of listening’ as the appropriate metric because there is a direct correlation between this figure (how many hours are listened to commercial radio) and how much revenue the sector generates.

The graph below, taken from RAJAR data, shows the ‘share of listening’ attracted by BBC radio stations amongst 15-44 year olds since 1999.

It is evident that the listening share of most BBC stations has remained relatively static over this period. The exception is Radio Two, whose share of listening amongst 15-44 year olds has more than doubled from 4.9% to 10.5% over the last decade. It is true that this growth has started to level out in recent years, as your article asserts, but there is no denying that the damage has already been done.

The graph shows clearly that this significant increase in listening has not been achieved by migration from competing BBC radio services to Radio 2. On the contrary, the BBC’s overall share of listening amongst 15-44 year olds has increased from 36.5% to 44.7% during the last decade and, most importantly for commercial radio, is continuing to grow year-on-year.

The graph below demonstrates clearly that it is commercial radio which has lost listening share, from both its local and national stations, that has migrated to the BBC. As a result, commercial radio’s listening share amongst 15-44 year olds has fallen from 61.7% to 52.1% over the last decade.

 
The danger for the commercial radio sector is that, if its market share falls below 50%, potential advertisers might no longer consider radio to be the ‘powerhouse’ delivery platform amongst 15-44 year olds that it used to be. The impact will not simply be a proportional loss in advertising revenues, but a significant loss of confidence in radio as an advertising medium to reach 15-44 year olds.

This is why, inside the BBC and Radio Two, a change in strategic policy might look as if it only results in an increase in BBC market share of a percentage point or two. For the commercial sector, not only does that single percentage point lead directly to a proportional loss of revenue but, sustained in the longer term, it can potentially undermine the medium’s ability to convince advertisers to use radio rather than, say, digital TV or the internet.

This is why the promise you make that “Radio 2 listeners won’t get any younger” is little comfort to a sector that has already been damaged by BBC strategic policies and which is continuing to lose market share year-on-year amongst its ‘heartland audience’ to BBC radio as a whole.

Of course, some of this listening loss can be attributed to commercial radio’s own competitive (in)ability to compete with the BBC – I would be first in line to argue that case – but unless its downward spiral of diminishing listening and diminishing revenues can be reversed, commercial radio could be decimated to the point where it can no longer be a financially viable business.

I write to you not to criticise Radio Two, which is a remarkable station, nor to apologise for the commercial radio sector, which has to shoulder considerable blame for losing touch with its audience. I write to illustrate that the industry’s own data clearly shows the BBC continuing to eat away at commercial radio’s ‘heartland audience’, and I write so that the BBC Trust might understand the consequences if the migration of radio listening to the BBC continues at its current rate.

Yours,
Grant Goddard

30 November 2009

Commercial radio and DAB: turkeys voting for Christmas

Significant players in the UK commercial radio industry, along with Digital Radio UK, the Digital Radio Development Bureau, DCMS and Ofcom are all lobbying for DAB receiver take-up to be accelerated and for consumers to migrate their radio listening to DAB as quickly as possible. However, the industry’s own data suggest that the pursuit of these strategies will simply reduce even further commercial radio’s already declining share of radio listening versus the BBC.

The commercial radio sector’s diminishing success in competing for listeners against the BBC remains one of its most pressing problems. In 1998, commercial radio’s share of listening was 51.1%, but that figure is now down to 42.4% [RAJAR Q2 1998 versus Q3 2009]. Conversely, the BBC’s share has increased from 46.8% to 55.0% over the same period. The long-term decline in commercial radio’s market power looks like this in recent quarters [see graph below]:

However, if we examine listening solely on digital radio platforms, we see that commercial radio is losing listening share much more sharply [see graph below]. In 2007, commercial radio’s share of listening via digital platforms had been above the average for all platforms and so was ‘helping’ the overall fight against the BBC for market share. However, in two of the last three quarters, commercial radio’s share via digital platforms has been lower than for all platforms, and so is now dragging down the sector’s overall market share.

Worse, with each new quarter, radio listening via digital platforms is growing as a proportion of total radio listening, so that the ‘contribution’ of digital platforms to the overall picture is becoming greater. In Q2 2007 (the earliest point on the timescale of these graphs), digital platforms accounted for only 12.9% of total listening. In the latest quarter, that proportion has increased to 21.1%.

Now, if we extract listening via DAB from the total for all digital platforms, we observe two phenomena [see graph below]. Firstly, commercial radio is badly losing the battle for DAB platform usage to the BBC by a ratio of 1:2. Secondly, commercial radio’s performance on the DAB platform is worsening over time. It is the combination of these two trends which is dragging down not only the commercial sector’s share of digital platforms, but also its overall competitive performance against the BBC.

To make matters worse, DAB is the largest element of radio listening via digital platforms (up from 54.4% in Q2 2007 to 62.9% in Q3 2009 of listening via all digital platforms), and the DAB platform’s contribution to total radio listening is similarly growing (up from 7.0% in Q2 2007 to 13.3% in Q3 2009). DAB is the focus of the radio industry’s digital platform marketing campaigns, so the commercial sector’s current poor performance on this platform is disastrous.

The data suggests that, far from the DAB platform helping the commercial radio sector compete more effectively against the BBC, the absolute opposite holds true:
• The average adult with a newly acquired DAB radio uses it for listening in a way that effectively reduces the commercial radio sector’s overall share of listening versus the BBC
• Acceleration of DAB usage will only serve to accelerate the decline in commercial radio’s share of radio listening versus the BBC.

These outcomes are hardly surprising when one considers industry data which show that:
• DAB radios are purchased predominantly by older people (the average age of a DAB radio receiver owner is 46, according to RAJAR)
• Older people listen to BBC radio much more than to commercial radio (BBC radio accounts for 63% of radio listening amongst over-45s, according to RAJAR).

The paradox is that stakeholders in commercial radio continue to push for DAB to be adopted by consumers as quickly as possible, even though the inevitable outcome will be to reduce further the commercial sector’s listening share, handing the BBC even more of a competitive advantage.

So why exactly does the notion continue to be voiced by significant players in commercial radio that the DAB platform is itself the answer to the sector’s present lack of competitiveness with the BBC?

[Data source: RAJAR. Statistical note: The graphs above to do not sum to 100% because the minimal amount of platform data released by RAJAR is ‘rounded’ (hours listened to 1,000,000 per week; listening shares to 0.1%) and the listening apportioned to the BBC and commercial radio sometimes does not sum to the total for a platform. Part of this shortfall may be accounted for by ‘other’ listening (neither the BBC nor commercial radio) which is not itemised by platform. Data for individual quarters are therefore somewhat inconsistent, though the trend over several quarters is likely to be indicative.]

Digital platforms: commercial radio losing share to BBC

Today’s RAJAR data demonstrates that a gulf is opening up between BBC radio and commercial radio in their ability to attract listening to digital platforms. Over the last year, the BBC is accelerating away from commercial radio in its audience’s usage of DAB, digital television and the internet to listen to live radio programmes. The significance of this growing gulf is reinforced when one remembers that the main RAJAR survey, from which the data below is taken, only measures ‘live’ radio listening and does not incorporate listening to either time-shifted, on-demand radio (‘listen again’) or to downloaded podcasts, both forms in which the BBC offers a much greater volume of content than UK commercial radio.

The danger here is that the BBC is poised to dominate listening on digital radio platforms in the long term, exactly as it already dominates listening on analogue radio platforms. One of the main reasons that the commercial radio sector invested so heavily in digital platforms during the last decade was the opportunity it offered to compete more effectively with the BBC for audiences. In the analogue world, the commercial sector has always argued that the BBC (having been there first) was allocated more and better spectrum for its radio stations. ‘Digital’, particularly DAB, seemed to offer the commercial sector a chance to ‘even the score’ with the BBC. The RAJAR data show that this ambition is not succeeding.

Across all digital platforms aggregated, commercial radio is losing ground, with the latest quarter (Q3 2009) reducing its share of listening to 41%, versus the BBC’s 56% share.

Taking each digital platform in turn, commercial radio’s share of listening on the DAB platform fell to 33% in Q3 2009, compared to the BBC’s 65%. This is not surprising because the age profile of DAB purchasers tends to be older listeners who are statistically more likely to listen to BBC stations. However, it does pose a grave question as to the return that commercial radio can expect from its substantial investment to date in DAB infrastructure, if listening on that platform is dominated so much by the BBC.

The digital TV platform is one that commercial radio has long dominated because of the large amount of spectrum it leased in the early days of Freeview. However, the increasing popularity of digital terrestrial television has already substantially increased the cost of spectrum on Freeview for the radio industry when its contracts come up for renewal. Furthermore, the forthcoming re-ordering of the multiplexes to accommodate HD television and new compression codecs is likely to squeeze commercial radio’s access to Freeview spectrum even more so. Before long, it is likely that the BBC will dominate the digital TV platform, just as it already does on DAB. Presently, the BBC has a 45% share, compared to commercial radio’s 51%.

As might be expected, the BBC’s strong online presence has already put it in the commanding position in terms of its share of listening via the internet platform. The integration of BBC radio into the iPlayer has no doubt helped as well, whereas commercial radio’s offerings are relatively more fractured and less heavily marketed, despite the excellent innovation of the RadioCentre Player. The BBC has a 50% share of listening on the internet platform, compared to commercial radio’s 37%.

The significance of commercial radio’s diminishing share of these three digital platforms is demonstrated when we look at the two sectors’ listening shares achieved on the analogue platform alone. Once one removes the digital platforms from the picture, it is evident that the shares of both the BBC and commercial radio have remained relatively stable in recent years. In other words, it is commercial radio’s declining share of listening on digital platforms that is effectively pulling the sector’s total share of listening (analogue + digital) down, particularly as digital platforms are growing as a proportion of total radio listening (21.1% in Q3 2009).

There is a paradox here. The commercial sector invested heavily in the DAB platform, believing that the new technologies would help it INCREASE its overall share of radio listening versus the BBC. In fact, that investment has recently helped to DIMINISH commercial radio’s overall share of listening. Digital television remains the only platform in which commercial radio dominates, and yet this is the very platform where commercial radio will be forced to cede spectrum and face, once more, losing out to the BBC whose spectrum for radio is guaranteed.

It is important to emphasise that these graphs show only the SHARE of listening on these platforms. The volumes of listening on each of these platforms have demonstrated absolute growth for both commercial radio and for the BBC over the same time period. But, more than any other digital platform, it is significant that the DAB platform is dominated by the BBC which now accounts for almost two-thirds of its usage. Such data is important when making decisions about the potential returns on further investments in DAB infrastructure. Will further investment simply maintain the existing imbalance, or will it really improve commercial radio’s share? Does investment in infrastructure also require parallel investment in new content that will appeal directly to the older age groups who own DAB radios?

Some possible reasons for commercial radio’s diminishing share of listening on digital platforms include:

• Commercial radio’s tendency to invest in DAB infrastructure more significantly than in original digital-only content
• Recent closures of many digital-only radio stations in the commercial sector
• The BBC’s relatively stable resource base, at a time when commercial radio revenues are falling precipitously
• The BBC’s long-held policy to invest simultaneously in multiple platforms, whereas commercial radio has focused on DAB and, to a lesser extent, Freeview
• The BBC’s focus on creating exclusive digital-only content unavailable on the analogue platform
• The BBC’s 360-degree music royalty agreements which allow it to use diverse platforms, whereas commercial radio requires separate (and more restrictive) agreements for time-shifted content and podcasts
• The BBC’s long-term, consistent promotion of content and digital platforms across TV, radio and the internet whereas commercial radio is less willing to cross-promote content or digital platforms that migrate listeners away from its core analogue offerings
• Frequent management changes and ownership changes in some parts of commercial radio, where substantial consolidation has often translated into short-term ‘slash and burn’ rather than ‘invest and build’ policies.

Whatever the reasons, we are not where we were meant to be – that is, we are not where it had been anticipated more than a decade ago commercial radio would be when investment in digital platforms, notably DAB, was expected to produce a beneficial outcome for commercial radio audiences versus the BBC. To put it plainly, the strategy conceived in the 1990’s has not worked. Commercial radio offerings do not dominate digital platforms (yes, they are more numerous, but they do not attract more hours listened than the BBC). DAB has become a largely BBC platform.

So, what can be done? Some of the issues noted above require a more level playing field to be established between commercial radio and the BBC. One such example of a practical solution is the Radio Council plan for a new UK Radio Player that will offer BBC and commercial radio content from a single aggregated access point. Other issues remain mostly in the lap of the gods (revenues, for example). Some issues require the BBC to be less predatory (or more regulated) and for the commercial sector to be more focused on strategic, long-term objectives (such as an online strategy that is more than simulcasting).

There is no single answer to this complex problem, though the commercial radio sector is hobbled by both its present lack of profitability and the regulatory strings that are attached to the majority of its analogue radio licences. What is desperately needed in these difficult times is not minor regulatory tinkering (such as adjusting how many hours of local content a local station is required to broadcast) but a wholesale change in strategy to maintain a commercial radio sector that can thrive in the digital marketplace we now inhabit. Will the imminent Digital Economy Bill prove sufficiently forward-thinking in its radio policy proposals?

[Statistical note: The graphs above to do not sum to 100% because the minimal amount of platform data released by RAJAR is ‘rounded’ (hours listened to 1,000,000; listening shares to 0.1%) and the listening apportioned to the BBC and commercial radio sometimes does not add up to the total for a platform. Some of this shortfall may be accounted for by ‘other’ listening (neither the BBC nor commercial radio) which is not itemised by platform. Data for individual quarters are therefore somewhat inconsistent, though the trend over several quarters is likely to be indicative. Additionally, there is an element of radio listening unattributed to any platform, 12.8% of the total in Q3 2009, but which is roughly equally applicable to BBC radio and commercial radio.]

UK Commercial Radio In Numbers: Q1 2009

Click here for my latest presentation containing data for the UK commercial radio industry’s key performance metrics in Q1 2009 for revenues, audiences and radio receiver hardware.

Revenues

Q1 2009 radio revenues were down 19.5% year-on-year, eclipsing the previous quarter’s 14.5% decline (although Q1 2008 had been an exceptionally strong quarter). National advertising continues to weaken, the last four quarters having declined by 15.9%, 12.2%, 21.2% and 28.8% respectively year-on-year. By comparison, local revenues have proven more resilient, down 6.4% in Q1 2009 year-on-year.

The gravity of the downturn is demonstrated by the fact that Q1 2009 was the lowest quarter for revenues since 1999 (at face value – if inflation were factored, the situation would be worse). The size of the industry is likely to continue to contract throughout 2009 and it will have to make further, significant cuts to overheads simply to ensure its survival. Public and parliamentary debate to date has focused upon the economic plight of local newspapers, but local commercial radio is just as endangered.

John Myers’ local radio report for Digital Britain suggested a number of regulatory and legislative changes that would potentially ease the financial burden on the commercial radio sector, but these still remain proposals at present. Until the government’s Digital Britain final report and Ofcom’s consultation exercises potentially turn these recommendations into action, the worsening economic pressures on commercial radio are likely to continue to produce further casualties.

Although some voices are already talking up a future bounce back of revenues after the recession (whenever that might be), it is important to recognise that the recent advertising downturn has only exacerbated a downward trend in radio revenues that was already established. In real terms (removing the impact of inflation), radio revenues peaked in 2000 and had already declined by 25% between 2000 and 2008. The current economic cycle is merely aggravating the structural decline that was already evident.

Audiences

At the root of commercial radio’s structural problem is the public’s declining consumption of its output – hours listened during the last four quarters were down 2.3% year-on-year. Radio as a medium continues to attract significant amounts of listening (22.4 hours per week per listener) and reaches 90% of the population weekly. Within those impressive totals, commercial radio is maintaining most of its reach but is losing listener hours. In Q1 2009, the average commercial radio listener consumed 13.5 hours per week, compared with 15.6 hours per week five years earlier.

It would be easy to lay the blame for this loss of listening at the door of increasingly promiscuous 15-24 year olds spending increasing amounts of time using mobile phone applications, social networking websites and streamed video. Whilst it is true that 15-24 year olds’ average time spent with commercial radio has fallen to 12.4 hours per week in Q1 2009 from 15.2 hours per week eight years ago, blame must also be shouldered by the other constituent demographics within commercial radio’s ‘heartland’ 15-44 year old audience.

Reductions in time spent listening to commercial radio have been almost as substantial amongst 25-34 year olds (12.7 hours per week in Q1 2009, down from 15.5 hours eight years earlier) and 35-44 year olds (14.2 hours per week in Q1 2009, down from 16.6 hours eight years ago). Commercial radio’s share of listening amongst both these demographics fell to 49% in Q1 2009, so that BBC radio listening now dominates all age groups except for 15-24 year olds, in which commercial radio still has a 59% share. Only two quarters ago, commercial radio’s share had been above 50% in all three constituent demographics of its 15-44 ‘heartland’ audience whilst, back in 1999, it had been above 60% in all three. These changes represent the crux of commercial radio’s long-term problem.

Additionally, people under the age of 40 are evidently listening to more ‘audio’ then ever before, assisted by the take-up of portable audio players and the blossoming integration of audio applications into mobile phones. However, listening on these new platforms is not being reflected in the audience data quoted above because the RAJAR radio ratings metric continues to define ‘radio’ listening in the traditional linear way, excluding time-shifted consumption (listen again, podcasts) and non-broadcasters (Last.fm, Spotify). Sooner or later, the industry will have to decide whether RAJAR is to remain merely a marketing tool to demonstrate the two traditional broadcasters’ (BBC and commercial radio) continuing dominance of the shrinking market for linear radio; or whether it is more important for RAJAR to demonstrate that ‘audio’ is a growing consumer medium now shared amongst a widening group of content providers. Comments made recently by the BBC’s Tim Davie at the RadioCentre conference offer encouragement in this respect.

Transactions, Openings & Closures

In May 2009, Global Radio finally sold its eight Midlands stations (an OFT requirement of its acquisition of GCap Media) to former Chrysalis Radio chief executive Phil Riley in a deal reported to be worth £30m and backed by Lloyds TSB. Global’s rival Bauer Radio was long anticipated to be the successful buyer, causing some to comment that the transaction has the hallmarks of a ‘warehousing’ deal that would satisfy current competition issues until media ownership rules are amended by legislation to allow further radio consolidation and cross-ownership.

In May 2009, UKRD succeeded in its acquisition of The Local Radio Company [TLRC] in a deal that valued the latter at £2.88m. UKRD owned six local stations, having closed one and sold three stations during the last year. TLRC owned 20 stations, having sold eight during the last year. Since the acquisition, two further TLRC stations have been sold – Bournemouth’s Fire FM to Westward Broadcasting for £40,001, and Macclesfield’s Silk FM to neighbouring Dee 106.3 for a nominal amount. In the seven months to April 2009, Fire’s operating loss was £129k on revenues of £216k, implying an annual cost base of almost £600k, considerable for a station with a weekly reach of 28,000 adults.

In April 2009, TLRC also sold digital station Jazz FM for £1 to former TLRC chief executive Richard Wheatly and former finance director Alistair Mackenzie, the station having lost £733k in the six months to March 2009. In May 2009, the new owners announced a £500k national poster campaign for the station which broadcasts on Sky, Freesat and regional DAB multiplexes. To date, no digital radio station has generated an operating profit.

Forward Media finally exited the radio business by selling its last remaining stations, Connect FM in Kettering and Lite FM in Peterborough, to Adventure Radio (which owns Chelmsford Radio, Herts Mercury and Southend Radio) for undisclosed amounts.

In March 2009, Midwest Radio sold its two stations, MidWest Shaftesbury and MidWest Yeovil, to South West Radio Ltd, the company that had purchased five stations in the West Country from the administrators last year, following the failure of Laser Broadcasting. Another former Laser station, Fresh Radio in Skipton, was sold in March 2009 by administrators to Utopia Broadcasting which includes some station management.

In April 2009, CN Radio sold Touch FM in Banbury to a management buyout team for an undisclosed amount and the station was relaunched as Banbury Sound. In November 2008, CN had said it would close its Touch FM stations in both Banbury and Coventry if it did not find buyers.

April and May 2009 saw the closure of seven local analogue commercial stations, a greater number than in the previous three years. Ofcom revoked the licence of KCR FM in Knowsley from owner Polaris Media, following failure to comply with its format. Sunrise Radio closed two London stations, Time 106.8 in Thamesmead and South London Radio in Lewisham, which had been up for sale since last year. Pennine FM, purchased by John Harding from TLRC last year, closed in Huddersfield. UTV closed Valleys Radio in South Wales after Ofcom had rejected a co-location request. Jason Bryant closed Radio Hampshire in Southampton and Winchester, stations which he had acquired from Southampton Football Club in 2007 and from Tindle Radio in 2008 respectively.

However, Pennine FM has since been acquired from administration by former station staff Adam Smith and Steve Buck and relaunched in May 2009. Similarly, internet broadcaster Play Radio has expressed interest in acquiring the two Radio Hampshire stations from administration, and a creditors’ meeting is due on 24 June.

On digital platforms, local Stafford station Focal Radio closed in May 2009 with the loss of 23 jobs after local businessman Mo Chaudry, who had invested £80,000 to ‘save’ the station, withdrew his support after being arrested on corruption charges involving Stoke City Council. London DAB station Zee Radio (simulcast on Spectrum AM) closed in April 2009 after a year on-air.

The national DAB multiplex Digital One has three new additions, two temporary. On 20 April 2009, forces radio station BFBS launched a simulcast on the platform, following its earlier trial. On 1 June 2009, Amazing Radio launched a six-month trial service showcasing unsigned UK bands as an extension of its Amazing Tunes website. From 27 June 2009, Folder Media’s Fun Kids station will be simulcasting a 14-week trial, extending its present availability on DAB in London.

In London, black talk/music station Colourful Radio launched on DAB on 2 March 2009, and music station NME Radio added DAB on 13 May 2009.

In the coming months, UKRD/TLRC is likely to divest further local stations from its portfolio. At the top end of the commercial radio business, consolidation has created huge groups of large local stations whilst, at the bottom end of the market, an increasing number of small local stations are now being divested from groups to local owners (or closed down). In a small way, this is returning local commercial radio to its 1970s roots, when it was expected that each station would be owned by local entrepreneurs. It will be instructive to see how each of these divergent strategies succeeds in such tough economic times.

Digital radio switchover – searching for the Credible Plan

Ed Richards, Chief Executive, Ofcom [ER]
Q&A @ Radio 3.0 conference, London (excerpt)
21 May 2009

Q: Isn’ t the big issue with DAB ‘[FM] switchoff’?….

ER: It is one big question but it definitely isn’t the only big question. And the difference with TV is very instructive. One of the profound differences with TV, of course, is that in the case of TV you couldn’t extend Freeview digital television without turning off the analogue spectrum, and that’s a profound difference. One of the other differences, of course, is that the value of the spectrum released by analogue switchoff in television is extremely high. Indeed, people are fighting each other metaphorically to get hold of it and have been ever since we mooted the idea some years ago. So there are some very big differences. The other obvious differences are that people have more radios than they do have TV’s, and so on and so forth. It is a very big question but I don’t think it’s the only one. That is why we put as much emphasis on the inherent sustainability and viability of digital [radio] services. It is always going to be asking people a lot to simply look forward, especially in the context of no switchoff date – and even if there was a switchoff date, it would be some years away – it’s always going to be asking them a lot to take losses for a long period. If only we can get to a point where DAB services are essentially at least breakeven, the better because that gives you a base from which to plan the other more challenging things, which include switchoff, and we want to work quite hard at that alongside the debate about Digital Britain.

Q: Without a date, it feels like it’s almost over the horizon. People I talk to in radio nearly all say ‘what we need is a date’. Is Digital Britain going to give us a date, do you think?

ER: That is a common theme that you hear, it is true. Before answering the thrust of that, I reiterate that I think you need to address the date and the migration issue, but you need to address the underlying economics first and immediately at the same time. And that means a frequency plan, savings in transmission, and so on and so forth, and it means continuing growth and more listeners on DAB. I hear everybody, a lot of people, say that we have to have a date. Will Digital Britain give us a date? I don’t know. There are a number of things we don’t know about Digital Britain yet.

Q: Would it be helpful if it did give us a date?

ER: It depends what the date was. It wouldn’t be helpful if the date was next year. I think the most important thing is … Let me rephrase the question slightly. You can only have a date if you have got a credible plan that delivers that date. So I could give you a date now but it would be meaningless. It would be rather like the television switchover date in one or two countries around the world – which I won’t name because it would get me into trouble – but they name dates, the governments stand up and puff up their chests and name dates but they are meaningless and, as soon as they have left the room, everybody laughs. So a date is meaningless without a credible plan to get there, so I recognise ….

Q: It’s a bit chicken and egg, isn’t it?

ER: Well, you have to have one in order to have the other. I think where people really are on this is, when they say we must have a date, that is another way of saying we must have a credible plan which gives us a date, and I would agree with that ….

Q: But how close are we to a credible plan?

ER: We are getting closer. We are doing a lot of work, as I said in my contribution, around the re-planning and I think the re-planning is very important to it. We need to have a clear set of proposals about quality of service and coverage and all those sorts of things, and those things need to be in place before you can have a credible plan. But there is work actively taking place on that and being driven forward. But better to get that right and to have a sense of urgency and determination, than just to pluck a meaningless date out of the air.

…..

Q: I’m still struggling slightly with [FM] switchoff only because it strikes me that almost everything hinges upon this and what you say is perfectly sensible – you can’t really have switchoff until you have a credible plan – but we know that, in the real world, unless we are forced by one thing or another, we don’t actually face this and businesses are very similar to life and everybody is still hedging their bets on FM. I speak to mobile phone manufacturers who say ‘well, look, we only have room in our phones for so many transmitters and receivers. We have got Bluetooth, we have got infra-red, we have da-da-da-da-da and all our users tell us they really value FM’. So they are not going to switch it until they have to. People with DAB radios in their cars are still a rarity and the manufacturers are not going to start installing them as standard until someone says ‘OK, 2013, 2012, 2011, whatever it is – that’s it’.

ER: Well, that’s the attraction of setting a date and driving everyone to it. But I’m trying to think of something different to say than what I said earlier.

Q: Would you favour it as an option?

ER: If there is a credible plan, yes. You’ve got to have a credible plan. And what you can’t do is just pluck a date out of the air and say ‘we’re all going to get there’ because I know what will happen under those circumstances. What will happen is that it will be fine for about a month and then, going for coffee outside the conference room, everyone will say ‘well, that is not going to happen, is it?’

Q: Except in TV, it has and it is.

ER: In TV, we wrote the original document which said ‘we will push on to digital switchover in this timeframe and here is how you can do it’. We wrote that document and said ‘these are the six of seven things you have to do to deliver it’ and we knew what you had to do to re-plan, we knew what you had to do to lead people across, we knew about the re-tuning, we knew the vast majority of things and there was a plan. That plan was then picked up by the creation of Digital UK, and so on. We’ve got to get to that next step, so I think it’s an exciting prospect but we’ve got to believe that it’s credible and deliverable. So I know that I’m repeating myself and not being particularly helpful but I do genuinely believe that and we need to – senior people in the industry need to sit round, look at this, stare at the steps and say ‘will that deliver it, is it consistent with what is in the audience’s interest?’ There’s no point in doing something which audiences then regard as a disaster. We have to do something that audiences, as it took place, will regard as a good thing. That’s an acid test and I think that’s possible, but there’s a lot of work to do and we’ve got to see if we can get there.

Exclusive digital radio content: saying it and doing it are two different things

Everyone seems to agree – it is the availability of exclusive radio content on digital platforms that will drive consumer uptake of the hardware and digital listening.

In its Final Report, the Digital Radio Working Group had said in December 2008: “We must present a compelling [DAB] proposition for consumers not only through new content, but in building a whole new radio experience”.

In its Interim Report, Digital Britain had said in January 2009: “We will expect the radio industry to strengthen its [DAB] consumer proposition both in terms of new and innovative content and to take advantage of the technological developments that DAB can offer”.

In its report commissioned for RadioCentre, Ingenious Consulting had said in January 2009: “…. there is not as much DAB-only material as hoped, and very little that’s truly compelling – there’s no ‘must have’ content as with sports and movies on Sky [TV]”.

In its submission to Digital Britain, Ofcom had recommended in March 2009 “the creation of new commercial radio stations to create a consumer proposition analogous to Freeview: a wide range of popular and niche services, delivered digitally”.

The Digital Radio Working Group had spent a year meeting throughout 2008 and made its final recommendations in New Year 2009. Five months later, for the consumer turning on their DAB radio, the choices do not seem much different than they were then. While the industry continues to talk and talk and talk and talk endlessly about what should be done, the consumer proposition for digital radio seems to be disappearing down the tubes. The data from the Q1 2009 RAJAR audience survey demonstrates that.

For commercial radio, its digital stations are now capturing a lower proportion of its listening (4.5%) than a year ago (5.5%). Only 23% of listening to commercial radio via digital platforms is to exclusively digital content, compared to 30% a year ago. These results are not surprising, given the closure of many digital stations during 2008 (Core, Oneword, Life, TheJazz, Virgin Radio Groove, Yarr, Easy, Mojo and Islam Radio). In 2009 so far, Stafford’s Focal Radio and London’s Zee Radio have also closed.

For the BBC, the results are almost as disappointing. Its digital stations have recovered from a poor performance last quarter, but it appears that much of this improvement may have been due to heightened public interest in 6Music following the Ross/Brand affair. BBC digital stations now capture 2.9% of listening to the BBC, compared to 2.7% a year ago. Only 14% of listening to the BBC via digital platforms is to exclusively digital content, compared to 16% a year ago. For the BBC, it is beginning to look as if interest in its digital content is no longer growing as it had been during 2006 and 2007.


The summary graph (below) of hours listened to exclusively digital radio stations demonstrates the trend’s recent tendency to have levelled out, primarily as a result of commercial radio’s performance since 2007, but now also as a result of the BBC’s performance in recent quarters. Whilst commercial radio experienced significant station closures in 2007/8, the BBC’s portfolio has remained constant and is receiving as much cross-promotional marketing exposure as ever.


It is true that some new initiatives to provide exclusive digital radio content have happened in recent months:

* Colourful Radio launched on DAB in London on 2 March 2009.

* BFBS Radio is available nationally on the Digital One DAB multiplex from 20 April 2009. The station is government funded and aimed at British forces and their families. Unfortunately, listening to BFBS by the general public is likely to substitute for either commercial radio listening, reducing its ratings and revenues, or substitute for BBC radio, reducing its ratings. In the end, neither result will help commercial radio or the BBC make DAB a successful platform.

* NME Radio launched on DAB in London on 13 May 2009.

* Amazing Radio is available nationally on the Digital One DAB multiplex from 1 June 2009 on a six-month trial. Amazing Tunes is a UK website showcasing unsigned bands and musicians. This is a great idea for an on-demand internet service but I am not sure this content will prove so appealing as a broadcast station. The problem, as Xfm discovered with its own disastrous experiment two years ago, is that listening to a playlist chosen by listeners can be as entertaining as looking through a relative’s 300 holiday snaps. Out of several million people’s playlists on Last.fm, I find there are no more than a handful of other people’s selections that I can sit through. What works well online for Amazing is not necessarily going to work in the broadcast medium.

However, at the same time:

* Bauer Radio has relocated Q Radio from London to Birmingham, and Heat Radio from London to Manchester, effectively downgrading these digital stations and making redundancies

* Bauer Radio has removed five stations (Kerrang!, The Hits, Q, Heat, Smash Hits) from the Sky platform

These downgrades are significant because Bauer is easily the biggest player in digital radio, now that Global/GCap/Chrysalis has sold/closed all but two of its digital stations, both of which (The Arrow and Chill) survive only as music jukeboxes. Commercial radio’s commitment to exclusive digital content seems to be hanging by the barest of threads. If Lord Carter decides not to respond positively to the commercial radio industry’s demands for some kind of financial support in the Digital Britain report published in a fortnight, that thread is in imminent danger of snapping.

And so the talk about the need for exclusive digital radio content is likely to run and run and run. But, as long as it remains talk rather than significant action, consumers will remain unimpressed and the graphs above will continue their present trajectories. Nobody wants this to be the outcome, but nobody seems to be doing anything concrete to stop it happening.

Digital radio: never mind the content, feel the bandwidth?

“It’s a simple equation. The BBC has had an unfair share of the analogue spectrum but digital enables the commercial players the space to compete on a much more equal footing.”
Steve Orchard, operations director, GCap Media in Music Week, 9 December 2006, p.10.

For almost an eternity, the UK commercial radio industry has complained vociferously that it has been discriminated against because the BBC has the use of more analogue spectrum than it does. The argument has been made repeatedly that commercial radio will always ‘under-perform’ against the BBC as long as the BBC is allocated more space on the FM waveband. To support this argument, its proponents hold up the fact that the BBC has four national channels on FM, whilst commercial radio has only one (they choose to ignore the fact that, additionally, the BBC has 40 local stations on FM, whilst commercial radio has 200+ local stations on FM).

When DAB radio arrived a decade ago, there was a widely held notion within commercial radio that the new technology provided an opportunity to even the score with the BBC. Whereas the government was unlikely ever to re-allocate analogue spectrum to provide equal amounts to the BBC and its commercial competitors, in digital spectrum the commercial sector pushed ahead with DAB (before the BBC did) and a successful ‘land grab’ rewarded it with much more DAB spectrum than the BBC. The prognosis was that, in the future, DAB would replace analogue usage, and that the commercial sector’s dominance of digital spectrum would eventually reward it with the dominance over the BBC it craved.

It is difficult to say precisely how much more DAB digital spectrum the commercial radio sector has than the BBC. With DAB, there is a degree of flexibility because you have the choice to either use a section of spectrum for one station (in high audio quality) or for two or three stations (in lower audio quality). Commercial radio and the BBC each have one national DAB multiplex (though their coverage of the UK is not identical). Additionally, commercial radio has 46 operational local and regional multiplexes that cover the most populous parts of the UK. These multiplexes probably more than double commercial radio’s superiority over the BBC in DAB spectrum. But then commercial radio also leases some space on its local multiplexes to the BBC for its local stations. This makes comparisons complicated.

Whatever the detail, it is obvious that commercial radio has control of far more DAB digital spectrum than does the BBC. To compound the situation, commercial radio also has control of far more Freeview digital radio spectrum than does the BBC. So, as had been hotly anticipated a decade ago, surely by now commercial radio must have the upper hand over the BBC in digital radio listening. The answer is ‘yes’ – commercial radio had almost been winning the digital race – and ‘no’ – it is no longer. In fact, the latest RAJAR data show that commercial radio’s share of digital listening (40.5% in Q1 2009) has fallen below its share of analogue listening (41.6% in Q1 2009) for the first time.

These data cover all digital listening to all stations available on digital platforms (including simulcasts of analogue stations). However, because of the RAJAR methodology, the data do not include time-shifted listening to ‘listen again’ and ‘podcast’ radio content. These are both areas in which the BBC offers far more content (and markets it much more heavily) than does commercial radio. If it were possible to incorporate this time-shifted listening into the above data (which it is not), it is likely that commercial radio’s share of listening would be much lower than its present 40.5% via digital platforms.

The long-held belief that commercial radio would somehow automatically win the war with the BBC on digital spectrum purely because it controlled more spectrum had always been mistaken. This belief assumes, somewhat bizarrely, that each consumer randomly spins their radio dial and then leaves it on whatever frequency the radio has landed on. Only by utilising such a random system of selection would usage ever be proportionate to the amount of spectrum. Unfortunately for the commercial radio sector, consumers are not mindless idiots. Anyone endowed with an Economics GCSE can easily see the gaping holes in this notion. Apparently few in the commercial radio industry could.

Consumers make choices and the radio station they decide to listen to is the one from which they expect to derive the most ‘utility’. This is why ‘content is king’. This is why BBC Radio Two and Three both use equal amounts of spectrum, but the former has a 16% share, and the latter 1%. And this is why one fantastic radio station will always attract more listening than any number of mediocre ones (viz Atlantic 252, Laser 558, Luxembourg 208). It is not about how much spectrum you occupy, but about what you do with it. Consumers are motivated to listen by your content, not by your spectrum.

For commercial radio, after a decade of trying to convince itself and others that its abundance of digital spectrum would somehow entitle it to automatically trash the BBC, the dream (and it was a dream) is now over. Belatedly, it is back to the drawing board. As the BBC, PrimeTime, Bauer and Planet Rock have demonstrated, if you put some content on digital radio that consumers want to listen to, then they will listen (if they are made aware it exists through a marketing campaign). Digital radio would have a lot more listeners today if that simple truism had been understood by more players in the commercial radio sector a decade ago.